Prof Chuck Holmes, The Common Sense Economist

Why Am I Afraid?

I am afraid for my country and for my daughter, and for my grand daughter, and for my two great grandsons. The future does not look too bright. A WSJ/NBC poll found that 76% of Americans do not believe their children will be better off than they. 74% believe the country is on the wrong track. I agree with both. We do not have a good economic future.
Our debt will be a burden on our descendents. Federal spending in 2007 was $2.57 trillion. Federal spending in 2014 is $3.52 trillion. Our national debt in 2007 was $9 trillion. It is now $167.7 trillion. The last years of a “balanced budget” were 1998 to 2001 under President Clinton. The total of surpluses for these years was $559 billion. But the National Debt increased by $3 trillion. Go figure. Debt per citizen in 2007 was $29,804. It is now $55,356. More important, the debt per taxpayer, who must bear the burden, is $151,527! And that’s only part of the problem. When you add in state and local debt and our unfunded liabilities, which must eventually be paid, our total debt is $139.6 trillion! How will our descendents ever take care of that?
Americans are not working as much as they used to. The Worker Participation Rate is now 62.9%, the lowest since March 1978. It is down from 67.3% in March 2000 (Clinton) but up from 58.65 in January 1965 (Johnson).
The number of employed workers has not kept up with the increase in population. In July 2007 at the start of the “great recession.” 134.3 million were employed. In July 2014, 135.8 M workers were employed, for an increase of 1.1%. Population increased from 301.2 million to 318.6 million for a 5.8% increase. Increase in employed workers trailed population increase by 4.7%.
Americans are more dependent on the government. According to HHS, 23.1% of Americans were receiving benefits from one of three major welfare programs in 2011. One can only guess how much the number has increased since the government has been seeking people to apply for food stamps and other benefits. Beneficiaries are now issued by EBT (electronic benefit transfer), a kind of government credit card, to obtain items from participating merchants. It was reported that beneficiaries could use the cards for lap dances at sex clubs. I think the government took care of that benefit to the disappointment of many of the good ol’ boys.
The costs of illegal immigrants are a drain on the American economy. A Heritage Foundation study found that the average immigrant household has a net deficit (benefits received minus taxes paid) of $14,387. After amnesty the deficit would rise to about $28,000 per household. A CBO study found that tax revenues of immigrants will never offset the costs of services provided.
Standard and Poor’s estimates that the cost born by local governments to educate illegal children is about $11.2 billion. Other estimates of the cost to educate illegal children and children of illegal immigrants reached $30 billion in 2009. The recent influx of tens of thousands of children into the United States from Central American countries through Mexico is not included. These are only the costs of education for children. They don’t include costs of medical care, incarceration of criminal immigrants, welfare, and other social aid.
The Washington Times reports that legalization of illegal immigrants will cost $6.3 trillion.
As Charles Murray revealed in his monumental study, Losing Ground, government assistance has the reverse effect of increasing dependence on government rather fostering independence. We have become a nation seeking equality of outcomes rather than opportunity. A long-time friend and colleague who participated in the Occupy Wall Street movement stated in a discussion of equality of income, “We don’t want your income, we want your wealth.” Wealth is essentially saved income. It seems that many Americans don’t want the opportunity to acquire income, save, invest, and foster growth. They merely want that which others have acquired.
We have become a nation of dependence and reliance on others rather than one of self-reliance and independence. What will happen when those who contribute wealth run out of wealth?
My country does not have a very bright economic future.